INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

10. INCOME TAXES

Total income taxes for the years ended December 31, 2021, 2020 and 2019 are presented in the table below.

	For the year ended December 31,
	2021			2020		2019
Income tax expense	$	2,071,503		$	1,965,679	$	2,175,274
Unrealized gains (losses) on securities available for sale presented in accumulated other comprehensive income (loss)		(1,010,881	)		315,546		(600,765	)
Total	$	1,060,622		$	2,281,225	$	1,574,509

Income tax expense was as follows:

	For the year ended December 31,
	2021			2020		2019
Current income taxes
Federal	$	1,796,283		$	1,543,334	$	1,742,430
State		321,971			—		—
Total current tax expense		2,118,254			1,543,334		1,742,430
Deferred income tax (benefit) expense		(46,751	)		422,345		432,844
Total income tax expense	$	2,071,503		$	1,965,679	$	2,175,274

The differences between actual income tax expense and the amounts computed by applying the U.S. federal income tax rate of 21% to pretax income from continuing operations for the periods indicated are reconciled in the table below.

	For the year ended December 31,
	2021			2020			2019
Computed “expected” tax expense	$	1,851,433		$	1,769,525		$	1,993,679
Increase (reduction) in income taxes resulting from:
Amortization of credit and gain		—			—			1,685
Stock based compensation		21,637			19,527			16,391
Valuation allowance		7,658			8,083			7,123
Other		7,477			7,259			6,233
State income tax, net of federal benefit		248,887			238,729			268,000
Tax exempt interest income		(65,589	)		(77,444	)		(117,837	)
	$	2,071,503		$	1,965,679		$	2,175,274

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 are presented below.

	December 31,
	2021			2020
Deferred tax assets:
Allowance for loan losses	$	905,365		$	849,159
State credit carryforward		—			5,762
Deferred loan fees		102,581			141,993
Passthrough income		26,525			26,525
State net operating loss carryforward		97,655			89,997
Nonaccrual interest		29,246			30,528
Other		9,432			9,432
Total gross deferred tax assets		1,170,804			1,153,396
Valuation allowance		(97,655	)		(89,997	)
Total gross deferred tax assets, net of valuation allowance		1,073,149			1,063,399
Deferred tax liabilities:
Fixed assets, principally due to differences in depreciation		(338,716	)		(382,668	)
Unrealized (gain) loss on securities available for sale		(1,360,199	)		(443,889	)
State credit carryforward		(5,672	)		—
Prepaid expenses		(29,869	)		(21,633	)
Other		(58,619	)		(57,918	)
		(1,793,075	)		(906,108	)
Net deferred tax (liability) asset	$	(719,926	)	$	157,291

There was a $97,655 and $89,997 valuation allowance for deferred tax assets at December 31, 2021 and 2020, respectively, associated with the Company’s state tax credits. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and prior to their expiration governed by the income tax code. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred income tax assets are expected to be deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowance at December 31, 2021 and 2020. The amount of the deferred income tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid.

The Company has analyzed the tax positions taken or expected to be taken in its tax returns and concluded it has no liability related to uncertain tax positions in accordance with applicable regulations.

Tax returns for 2018 and subsequent years are subject to examination by taxing authorities.